The document summarizes a research article about mergers and acquisitions in the Indian banking industry, specifically focusing on ICICI Bank Ltd. It discusses ICICI Bank's acquisition of nine other financial firms to facilitate its growth. The article is divided into four parts: 1) an introduction to mergers and acquisitions, 2) ICICI Bank's historical background and acquisitions, 3) a detailed discussion of each acquisition, and 4) a conclusion on the importance of strategic planning for mergers. A literature review examines factors important for managing mergers effectively such as communication, corporate culture, stress, and human resource issues.
Capstone Project on Merger & Acquisition on Banking Sectorsavio basimalla
This document appears to be a student capstone project on mergers and acquisitions in the banking sector. It includes sections on defining mergers and types of mergers, benefits of mergers, laws affecting takeovers and mergers, and the research methodology. The student declares this is their original work submitted for a postgraduate diploma. They acknowledge help from their professor and friends.
A conflict of interest occurs when an individual or organization is involved in multiple interests, and one interest could potentially corrupt their judgment in another. The presence of a conflict of interest does not necessarily mean wrongdoing will occur, but it creates a risk that decisions may be unduly influenced. Some organizations have significant equity stakes in other companies that are worth substantially more than the organization's own market value, representing a hidden or embedded value.
MERGERS AND ACQUISITIONS PROSPECTS: INDIAN BANKS STUDYpaperpublications3
Abstract:This research paper looks at Mergers and Acquisitions (M&A’s) that have happened in Indian banking sector to understand the resulting synergies and the long term implications of the merger. The paper also analyses emerging future trends and recommends steps that banks should consider for future. The paper reviews the trends in M&A’s in Indian banking and then impact of M&A’s has been studied in three leading banks of India. The study covers the area of performance evaluation of M&A’s in Indian banking sector during the period from 2000 to 2013. The paper compares pre and post merger financial performance of merged banks with the help of financial parameters like, Net Profit margin, operating Profit margin, Return on Capital Employed, Return on Equity, earnings per share, capital adequacy ratio, dividend per share etc. The findings suggest that to some extent M&A’s has been successful in Indian banking sector. The Government and Policy makers should not promote merger between strong and distressed banks as a way to promote the interest of the depositors of distressed banks, as it will have adverse effect upon the asset quality of the stronger banks.
Keywords:Strategic alliance, capital adequacy, mergers, consolidation, ratios.
Analysis of Facebook’s Acquisition of Whatsappsnigdha sarkar
The document discusses the reverse merger of ICICI Ltd. with ICICI Bank in 2002, which created India's first "Universal Bank". It provides background on both companies, including their establishment and operations. The key reasons for the merger included taking advantage of ICICI Bank's access to lower-cost deposit funds, diversifying risks by becoming a financial conglomerate offering multiple services, addressing ICICI Ltd.'s asset-liability mismatch issues from falling interest rates, realizing operational synergies, and tapping growing domestic wealth. The merger combined the companies' complementary strengths in long-term financing and retail/SME banking.
Equity Research Report of Kotak mahindra bankAkshay Virkar
Kotak Mahindra Bank is an Indian financial services firm that was previously a non-banking financial company but converted to a bank in 2003. The document analyzes the company's fundamentals, including its financial performance, ratios, industry analysis and comparison to peers. It finds that the company has stable financial results that project future growth for Kotak Mahindra Bank.
This document provides an introduction and background on mergers and acquisitions (M&A) in the banking sector. It discusses different types of M&A including acquisitions, mergers, and lists some key M&A deals that have occurred in the Indian banking sector. The document also reviews literature on the impact and motivations of M&A on employees, profitability, and market structure. It outlines the objectives of the study which are to understand the conceptual framework of M&A, the impact on employees and operating efficiency, and review relevant literature on M&A in banking.
This document discusses mergers and acquisitions in the Indian banking sector. It begins by introducing mergers and acquisitions, defining mergers as a combination of two companies into one surviving company that acquires all assets and liabilities, while acquisitions involve one company purchasing a controlling stake in another. It then provides an overview of the Indian banking industry and its structure. The remainder of the document discusses the types, purposes, impacts, advantages and differences between mergers and acquisitions in depth.
This project report summarizes asset liability management at ICICI Bank. ICICI Bank is India's largest private sector bank with over $109 billion in total assets. The report discusses ICICI Bank's board of directors and management. It then provides background on ICICI Bank and its joint venture with Prudential for asset management. The report defines asset liability management and outlines the objectives of studying ALM at ICICI Bank. It discusses the scope of ALM functions including liquidity risk, interest rate risk, and currency risk management.
Capstone Project on Merger & Acquisition on Banking Sectorsavio basimalla
This document appears to be a student capstone project on mergers and acquisitions in the banking sector. It includes sections on defining mergers and types of mergers, benefits of mergers, laws affecting takeovers and mergers, and the research methodology. The student declares this is their original work submitted for a postgraduate diploma. They acknowledge help from their professor and friends.
A conflict of interest occurs when an individual or organization is involved in multiple interests, and one interest could potentially corrupt their judgment in another. The presence of a conflict of interest does not necessarily mean wrongdoing will occur, but it creates a risk that decisions may be unduly influenced. Some organizations have significant equity stakes in other companies that are worth substantially more than the organization's own market value, representing a hidden or embedded value.
MERGERS AND ACQUISITIONS PROSPECTS: INDIAN BANKS STUDYpaperpublications3
Abstract:This research paper looks at Mergers and Acquisitions (M&A’s) that have happened in Indian banking sector to understand the resulting synergies and the long term implications of the merger. The paper also analyses emerging future trends and recommends steps that banks should consider for future. The paper reviews the trends in M&A’s in Indian banking and then impact of M&A’s has been studied in three leading banks of India. The study covers the area of performance evaluation of M&A’s in Indian banking sector during the period from 2000 to 2013. The paper compares pre and post merger financial performance of merged banks with the help of financial parameters like, Net Profit margin, operating Profit margin, Return on Capital Employed, Return on Equity, earnings per share, capital adequacy ratio, dividend per share etc. The findings suggest that to some extent M&A’s has been successful in Indian banking sector. The Government and Policy makers should not promote merger between strong and distressed banks as a way to promote the interest of the depositors of distressed banks, as it will have adverse effect upon the asset quality of the stronger banks.
Keywords:Strategic alliance, capital adequacy, mergers, consolidation, ratios.
Analysis of Facebook’s Acquisition of Whatsappsnigdha sarkar
The document discusses the reverse merger of ICICI Ltd. with ICICI Bank in 2002, which created India's first "Universal Bank". It provides background on both companies, including their establishment and operations. The key reasons for the merger included taking advantage of ICICI Bank's access to lower-cost deposit funds, diversifying risks by becoming a financial conglomerate offering multiple services, addressing ICICI Ltd.'s asset-liability mismatch issues from falling interest rates, realizing operational synergies, and tapping growing domestic wealth. The merger combined the companies' complementary strengths in long-term financing and retail/SME banking.
Equity Research Report of Kotak mahindra bankAkshay Virkar
Kotak Mahindra Bank is an Indian financial services firm that was previously a non-banking financial company but converted to a bank in 2003. The document analyzes the company's fundamentals, including its financial performance, ratios, industry analysis and comparison to peers. It finds that the company has stable financial results that project future growth for Kotak Mahindra Bank.
This document provides an introduction and background on mergers and acquisitions (M&A) in the banking sector. It discusses different types of M&A including acquisitions, mergers, and lists some key M&A deals that have occurred in the Indian banking sector. The document also reviews literature on the impact and motivations of M&A on employees, profitability, and market structure. It outlines the objectives of the study which are to understand the conceptual framework of M&A, the impact on employees and operating efficiency, and review relevant literature on M&A in banking.
This document discusses mergers and acquisitions in the Indian banking sector. It begins by introducing mergers and acquisitions, defining mergers as a combination of two companies into one surviving company that acquires all assets and liabilities, while acquisitions involve one company purchasing a controlling stake in another. It then provides an overview of the Indian banking industry and its structure. The remainder of the document discusses the types, purposes, impacts, advantages and differences between mergers and acquisitions in depth.
This project report summarizes asset liability management at ICICI Bank. ICICI Bank is India's largest private sector bank with over $109 billion in total assets. The report discusses ICICI Bank's board of directors and management. It then provides background on ICICI Bank and its joint venture with Prudential for asset management. The report defines asset liability management and outlines the objectives of studying ALM at ICICI Bank. It discusses the scope of ALM functions including liquidity risk, interest rate risk, and currency risk management.
This document is an independent project report submitted by Vikas Gour in partial fulfillment of the requirements for a degree from AIIM in 2013. The report analyzes the sector-wise investment allocation of top performing infrastructure themed mutual funds in India compared to poorly performing funds. By comparing the sector mix and top 10 holdings of the best and worst performers over a 3 month period, the analysis found no clear relationship between returns and sectors invested in. However, the top funds had invested in outstanding companies within each sector that helped deliver strong returns, while weak funds held companies that underperformed despite sector growth. The key lesson is for fund managers to identify best players that can succeed regardless of overall sector performance.
This document provides an overview of Reliance Money and its parent companies. Reliance Money is part of the Reliance ADA Group and was promoted by Reliance Capital, one of India's leading private sector financial services companies. It offers investment and trading services across asset classes. The document discusses Reliance Capital, Reliance Mutual Fund, Reliance Life Insurance, and Reliance Commercial Finance, which are all part of the larger Reliance ADA Group conglomerate. It provides brief descriptions of each company's business activities and roles within the financial services industry.
A study on progress and investors perception towerds dematerialization of sha...Projects Kart
The document discusses dematerialization of shares in India. It provides background on dematerialization, including that it was introduced by SEBI in 1996 to improve stock market efficiency. Dematerialization converts physical share certificates into electronic form by crediting them to an investor's depository participant account. The document then discusses the objectives and methodology of a study on the progress of dematerialization of shares and investors' perceptions towards it.
Entrepreneurship development - Institutional AssistanceSOMASUNDARAM T
The document discusses various types of institutional assistance available to small scale industries in India. It describes the financial assistance provided by State Finance Corporations (SFCs), Small Industries Development Bank of India (SIDBI), commercial banks, Karnataka State Industrial Investment and Development Corporation (KSIIDC), Karnataka State Small Industries Development Corporation (KSSIDC), and Industrial Finance Corporation of India (IFCI). It also outlines various loan schemes and eligibility criteria for small scale entrepreneurs to receive funding from these institutions.
The document provides an overview of the mutual funds industry in India from its origins in 1963 through 2003. It discusses the growth of the industry from only one company (UTI) until 1987 to include many private sector players by 2003. It summarizes key findings on unitholding patterns, including that individual investors accounted for 97% of accounts but only 41% of assets, while corporations contributed 57% of assets. It also discusses regulatory changes, new funds launched, dividends declared by various companies, and speeches given on the industry. The crisis at UTI from 1999-2002 is examined, noting structural flaws and officials using funds imprudently.
This document discusses mutual funds in India. It provides an overview of the mutual fund industry in India, including its origins and growth over time. It also discusses the objectives and role of the Association of Mutual Funds in India (AMFI), which acts as the apex body for mutual funds in the country. The key points covered are:
- The mutual fund industry started in 1963 with the formation of UTI and has grown significantly since market liberalization in the 1990s.
- AMFI was established in 1995 as the main industry association to represent mutual funds and maintain standards and ethics in the sector.
- AMFI aims to promote understanding of mutual funds, recommend best practices, and represent the industry to
This document provides details about a minor project report submitted by Akanksha Jain on analysis of the financial statements of ICICI Bank. It includes an introduction to ICICI Bank, its history, organizational structure, products and services. It also acknowledges the guidance provided by the internal faculty and expresses gratitude to various people involved in the project. The contents section provides an outline of the project report including chapters on financial statement analysis, analysis of ICICI Bank's financial statements, conclusions and recommendations.
The document provides an overview of the mutual funds industry in India. It discusses the history and growth of mutual funds in India from 1964 to present. Some key points:
1) UTI was established in 1964 as the first mutual fund in India to mobilize retail savings.
2) The industry opened up to private players in 1993, accelerating its growth.
3) As of 2022, there are over 40 asset management companies in India managing over Rs. 40 trillion in assets under management.
4) The mutual funds industry in India has experienced significant growth in assets and number of investors over the past few decades.
NJ India Invest Pvt. Ltd. is a financial services company that provides mutual fund distribution and advisory services. It has a nationwide presence through various branches and partners with several asset management companies to offer mutual fund products. The company aims to help investors grow their wealth through customized investment solutions and use of technology. It offers services like mutual fund investments, financial planning, and online and offline advisory support to its clients.
11.mutual fund in india an analysis of performance and some emerging issues i...Alexander Decker
This document analyzes the performance of Unit Trust of India (UTI), India's first mutual fund established in 1964. It discusses UTI's largest savings mobilization scheme, US-64, which faced a crisis in the late 1990s. The document evaluates UTI's overall performance in terms of savings mobilization, profitability, dividend distribution, income/expenditure patterns, investible funds, redemptions, and net fund inflows. It recommends measures to overcome challenges faced by UTI.
A critical view of undisclosed facts of disclosed fact sheets a case study of...iaemedu
This document summarizes a research paper that examines disclosure practices of financial statements for mutual funds in India. It discusses how financial statements should provide a true and fair view but often contain undisclosed facts. The paper aims to study disclosure norms, methods to improve timely financial reporting, and analyze disclosures in UTI mutual fund fact sheets. It reviews literature on perceptions of financial report disclosures and compliance with accounting standards in India. The paper also examines measures needed for good corporate governance like gradual liberalization policies, enhancing financial reporting, and improving investor protection laws.
Comparative study of mutual funds in india Rahul Todur
This document provides a project report on a comparative study of mutual funds in India with reference to HDFC Mutual Fund and SBI Mutual Fund. It includes an introduction to mutual funds, their history and development in India. It also outlines the objectives of the study, which are to analyze the growth of the mutual fund industry and evaluate the performance of schemes from major public and private sector funds. The report further describes HDFC Mutual Fund and SBI Mutual Fund in detail and includes a literature review, research methodology, data collection process and findings/suggestions from the comparative analysis.
Mergers and Acquisitions - Project report Girish KhairnarGirish Khairnar
This document discusses mergers and acquisitions (M&A), providing definitions and explaining the differences between mergers and acquisitions. It outlines the objectives, types, structures, processes, accounting, valuation methods, deal structures, impacts, value creation strategies, pitfalls, disadvantages of M&A. Examples of major M&A deals in the corporate and banking sectors in India are also provided, along with the author's personal experience working on an M&A deal between Varian Medical Systems entities.
Weber’s theory of location of industry,the various sources of finance to industrial units,Optimum size of units,Micro, small and medium enterprises,NEDFi,the distinctive features of modern approach to financial management,The various bases for determining the proportions (weights) to be employed in calculating the weighted average cost of capital, application of management accounting techniques for managerial decisions,the need for cost control,the use of control techniques in better cost management,the evolution and present status of direct taxes as provided in the Indian constitution,the provisions of the Income Tax Act with regard to tax deducted at source.
This document summarizes Weber's theory of industrial location and discusses various sources of finance available to industrial units. Weber classified location factors into primary/regional factors like transportation costs and labor costs, and secondary/agglomerative factors. The main sources of industrial finance in India include institutions like IDBI, ICICI, SIDBI, IFCI, and IIBL which provide loans, as well as sources like state financial corporations, foreign investment, IPOs, and more.
This document provides an overview of mutual funds in India. It discusses the history of mutual funds in India, starting with the establishment of the Unit Trust of India in 1963. It then covers the entry of public sector funds in 1987 and private sector funds in 1993, and increased regulation by SEBI in the following decades. The document also lists some of the major mutual fund companies currently operating in India and provides their approximate market shares as of 2015.
This document summarizes the key features of the ICICI Pru Elite Life insurance plan, including that it offers 9 investment funds with different risk-return profiles, unlimited free fund switches, and a death benefit of the higher of the sum assured or fund value. The minimum premium is Rs. 200,000 with a one pay or five pay option over a 10 to 30 year term. Loyalty additions are provided starting the 6th year to reduce the effective fund management charge over time.
ICICI Bank is India's second largest bank by total assets and profit. It has over 1,400 branches across India and a presence in 18 other countries. ICICI Bank offers various banking products and financial services to corporate and retail customers, including investment banking, insurance, venture capital and asset management. It has subsidiaries in several countries including the UK, Russia and Canada. ICICI Bank was originally formed in 1994 and was later publicly offered in India in 1998, reducing the parent company ICICI's ownership to 46%.
The document discusses the proposed merger between ICICI Limited and ICICI Bank. It provides details on the rationale for the merger, including creating synergies and economies of scale. The merger would create the second largest bank in India in terms of asset base. Independent advisors were appointed to determine the share exchange ratio. While the merger presented risks like integration challenges, it achieved the intended goal of forming a leader in the Indian financial sector.
This document is an independent project report submitted by Vikas Gour in partial fulfillment of the requirements for a degree from AIIM in 2013. The report analyzes the sector-wise investment allocation of top performing infrastructure themed mutual funds in India compared to poorly performing funds. By comparing the sector mix and top 10 holdings of the best and worst performers over a 3 month period, the analysis found no clear relationship between returns and sectors invested in. However, the top funds had invested in outstanding companies within each sector that helped deliver strong returns, while weak funds held companies that underperformed despite sector growth. The key lesson is for fund managers to identify best players that can succeed regardless of overall sector performance.
This document provides an overview of Reliance Money and its parent companies. Reliance Money is part of the Reliance ADA Group and was promoted by Reliance Capital, one of India's leading private sector financial services companies. It offers investment and trading services across asset classes. The document discusses Reliance Capital, Reliance Mutual Fund, Reliance Life Insurance, and Reliance Commercial Finance, which are all part of the larger Reliance ADA Group conglomerate. It provides brief descriptions of each company's business activities and roles within the financial services industry.
A study on progress and investors perception towerds dematerialization of sha...Projects Kart
The document discusses dematerialization of shares in India. It provides background on dematerialization, including that it was introduced by SEBI in 1996 to improve stock market efficiency. Dematerialization converts physical share certificates into electronic form by crediting them to an investor's depository participant account. The document then discusses the objectives and methodology of a study on the progress of dematerialization of shares and investors' perceptions towards it.
Entrepreneurship development - Institutional AssistanceSOMASUNDARAM T
The document discusses various types of institutional assistance available to small scale industries in India. It describes the financial assistance provided by State Finance Corporations (SFCs), Small Industries Development Bank of India (SIDBI), commercial banks, Karnataka State Industrial Investment and Development Corporation (KSIIDC), Karnataka State Small Industries Development Corporation (KSSIDC), and Industrial Finance Corporation of India (IFCI). It also outlines various loan schemes and eligibility criteria for small scale entrepreneurs to receive funding from these institutions.
The document provides an overview of the mutual funds industry in India from its origins in 1963 through 2003. It discusses the growth of the industry from only one company (UTI) until 1987 to include many private sector players by 2003. It summarizes key findings on unitholding patterns, including that individual investors accounted for 97% of accounts but only 41% of assets, while corporations contributed 57% of assets. It also discusses regulatory changes, new funds launched, dividends declared by various companies, and speeches given on the industry. The crisis at UTI from 1999-2002 is examined, noting structural flaws and officials using funds imprudently.
This document discusses mutual funds in India. It provides an overview of the mutual fund industry in India, including its origins and growth over time. It also discusses the objectives and role of the Association of Mutual Funds in India (AMFI), which acts as the apex body for mutual funds in the country. The key points covered are:
- The mutual fund industry started in 1963 with the formation of UTI and has grown significantly since market liberalization in the 1990s.
- AMFI was established in 1995 as the main industry association to represent mutual funds and maintain standards and ethics in the sector.
- AMFI aims to promote understanding of mutual funds, recommend best practices, and represent the industry to
This document provides details about a minor project report submitted by Akanksha Jain on analysis of the financial statements of ICICI Bank. It includes an introduction to ICICI Bank, its history, organizational structure, products and services. It also acknowledges the guidance provided by the internal faculty and expresses gratitude to various people involved in the project. The contents section provides an outline of the project report including chapters on financial statement analysis, analysis of ICICI Bank's financial statements, conclusions and recommendations.
The document provides an overview of the mutual funds industry in India. It discusses the history and growth of mutual funds in India from 1964 to present. Some key points:
1) UTI was established in 1964 as the first mutual fund in India to mobilize retail savings.
2) The industry opened up to private players in 1993, accelerating its growth.
3) As of 2022, there are over 40 asset management companies in India managing over Rs. 40 trillion in assets under management.
4) The mutual funds industry in India has experienced significant growth in assets and number of investors over the past few decades.
NJ India Invest Pvt. Ltd. is a financial services company that provides mutual fund distribution and advisory services. It has a nationwide presence through various branches and partners with several asset management companies to offer mutual fund products. The company aims to help investors grow their wealth through customized investment solutions and use of technology. It offers services like mutual fund investments, financial planning, and online and offline advisory support to its clients.
11.mutual fund in india an analysis of performance and some emerging issues i...Alexander Decker
This document analyzes the performance of Unit Trust of India (UTI), India's first mutual fund established in 1964. It discusses UTI's largest savings mobilization scheme, US-64, which faced a crisis in the late 1990s. The document evaluates UTI's overall performance in terms of savings mobilization, profitability, dividend distribution, income/expenditure patterns, investible funds, redemptions, and net fund inflows. It recommends measures to overcome challenges faced by UTI.
A critical view of undisclosed facts of disclosed fact sheets a case study of...iaemedu
This document summarizes a research paper that examines disclosure practices of financial statements for mutual funds in India. It discusses how financial statements should provide a true and fair view but often contain undisclosed facts. The paper aims to study disclosure norms, methods to improve timely financial reporting, and analyze disclosures in UTI mutual fund fact sheets. It reviews literature on perceptions of financial report disclosures and compliance with accounting standards in India. The paper also examines measures needed for good corporate governance like gradual liberalization policies, enhancing financial reporting, and improving investor protection laws.
Comparative study of mutual funds in india Rahul Todur
This document provides a project report on a comparative study of mutual funds in India with reference to HDFC Mutual Fund and SBI Mutual Fund. It includes an introduction to mutual funds, their history and development in India. It also outlines the objectives of the study, which are to analyze the growth of the mutual fund industry and evaluate the performance of schemes from major public and private sector funds. The report further describes HDFC Mutual Fund and SBI Mutual Fund in detail and includes a literature review, research methodology, data collection process and findings/suggestions from the comparative analysis.
Mergers and Acquisitions - Project report Girish KhairnarGirish Khairnar
This document discusses mergers and acquisitions (M&A), providing definitions and explaining the differences between mergers and acquisitions. It outlines the objectives, types, structures, processes, accounting, valuation methods, deal structures, impacts, value creation strategies, pitfalls, disadvantages of M&A. Examples of major M&A deals in the corporate and banking sectors in India are also provided, along with the author's personal experience working on an M&A deal between Varian Medical Systems entities.
Weber’s theory of location of industry,the various sources of finance to industrial units,Optimum size of units,Micro, small and medium enterprises,NEDFi,the distinctive features of modern approach to financial management,The various bases for determining the proportions (weights) to be employed in calculating the weighted average cost of capital, application of management accounting techniques for managerial decisions,the need for cost control,the use of control techniques in better cost management,the evolution and present status of direct taxes as provided in the Indian constitution,the provisions of the Income Tax Act with regard to tax deducted at source.
This document summarizes Weber's theory of industrial location and discusses various sources of finance available to industrial units. Weber classified location factors into primary/regional factors like transportation costs and labor costs, and secondary/agglomerative factors. The main sources of industrial finance in India include institutions like IDBI, ICICI, SIDBI, IFCI, and IIBL which provide loans, as well as sources like state financial corporations, foreign investment, IPOs, and more.
This document provides an overview of mutual funds in India. It discusses the history of mutual funds in India, starting with the establishment of the Unit Trust of India in 1963. It then covers the entry of public sector funds in 1987 and private sector funds in 1993, and increased regulation by SEBI in the following decades. The document also lists some of the major mutual fund companies currently operating in India and provides their approximate market shares as of 2015.
This document summarizes the key features of the ICICI Pru Elite Life insurance plan, including that it offers 9 investment funds with different risk-return profiles, unlimited free fund switches, and a death benefit of the higher of the sum assured or fund value. The minimum premium is Rs. 200,000 with a one pay or five pay option over a 10 to 30 year term. Loyalty additions are provided starting the 6th year to reduce the effective fund management charge over time.
ICICI Bank is India's second largest bank by total assets and profit. It has over 1,400 branches across India and a presence in 18 other countries. ICICI Bank offers various banking products and financial services to corporate and retail customers, including investment banking, insurance, venture capital and asset management. It has subsidiaries in several countries including the UK, Russia and Canada. ICICI Bank was originally formed in 1994 and was later publicly offered in India in 1998, reducing the parent company ICICI's ownership to 46%.
The document discusses the proposed merger between ICICI Limited and ICICI Bank. It provides details on the rationale for the merger, including creating synergies and economies of scale. The merger would create the second largest bank in India in terms of asset base. Independent advisors were appointed to determine the share exchange ratio. While the merger presented risks like integration challenges, it achieved the intended goal of forming a leader in the Indian financial sector.
ICICI Bank is India's second largest bank. It was founded in 1955 as the Industrial Credit and Investment Corporation of India to support the industrialization of India. ICICI Bank launched in 1994 and became the first Indian bank to list on the New York Stock Exchange in 2000. ICICI Bank provides a wide range of banking and financial services including retail banking, credit cards, investment banking, insurance, and private banking. It has over 800 branches across India and has expanded internationally with subsidiaries in countries like Canada, Russia, Singapore, and the United Kingdom.
This document appears to be a presentation on ICICI Bank submitted for a strategic management project. It includes an agenda covering topics like revenue, growth, market capitalization, business model, industry analysis, financial analysis, products and services by segment, competition, strategies, and more. Charts are included analyzing ICICI Bank's revenue, market capitalization, and various profitability ratios from 2008-2011.
Industrial Credit & Investment Corporation of India (ICICI) presented on their principles of management. ICICI is India's second largest bank with over 4 trillion rupees in total assets. The presentation covered ICICI's history, awards, vision, management style, strategy for future challenges, and plans to enable India's economy through digital initiatives by 2015. ICICI aims to be a truly universal bank and sustain double digit growth through product innovation, technology usage, and focus on retail banking, SMEs, and financial inclusion.
ICICI Bank is India's second largest bank. It has over 2,500 branches and 6,425 ATMs. In the recent fiscal year, ICICI Bank saw a 28% increase in net profit though total income declined. Deposits and advances grew by 26% and 19% respectively. The bank faces competition from other major banks like HDFC, Axis, and Kotak Mahindra, but plans to expand by opening 1,500 new branches and hiring 6,000 employees in the next 4 years as well as growing its international branch network.
The document provides information about ICICI Bank, including that it is India's second largest bank founded in 1995 as a joint venture with the World Bank. It discusses ICICI Bank's profile, top management including CEO Chanda Kochhar, network of over 8,000 ATMs and 2,752 branches, products and services, and SWOT analysis. The SWOT analysis notes ICICI Bank's strengths in being listed on the NYSE and pioneering internet banking, weaknesses in targeting only high-end customers and higher service charges, opportunities in new business areas, and threats from other improving banks.
The document discusses various types of mergers and acquisitions including horizontal, vertical, conglomerate, and concentric mergers. It provides examples for each type and explains their key characteristics. Some benefits of mergers include diversification, increased capacity and market share. However, mergers can fail due to issues with cultural integration, communication, and management. Acquisitions differ from mergers in that one company clearly takes ownership of another. Acquisitions aim to achieve economies of scale, staff reductions, new technology, and market reach. Hostile takeovers are strongly resisted while friendly takeovers have management agreement. Firms undertake takeovers to gain market growth, economies of scale, and complementing skills.
The document is a project report on mergers and acquisitions in the banking sector of India. It includes an abstract, introduction, objectives, scope and coverage, literature review, research methodology, and conceptualization of mergers and acquisitions. Specifically, it discusses the difference between mergers and acquisitions, with mergers involving the combination of two companies into one new entity under companies law and the court, while acquisitions refer to one company gaining controlling interest in another without combination under SEBI regulations. The report focuses on studying the merger between Global Trust Bank and Oriental Bank of Commerce in 2004.
MERGERS AND ACQUISITIONS IN INDIAN BANKING SECTORRaku Daku
This document provides an overview of mergers and acquisitions that have occurred in the Indian banking sector. It discusses several major mergers such as HDFC Bank and Times Bank in 1999, ICICI Bank acquiring Bank of Madura, and Global Trust Bank merging with UTI Bank. The motives for mergers are discussed, including improving competitiveness and shareholder value. Recommendations from the Narasimham Committee on banking reforms are summarized, including that mergers should not be used to bail out weak banks but could help strong banks. In conclusion, the Indian banking sector has generally destroyed shareholder wealth while mergers of strong banks tend to create value.
This document appears to be a project report on mergers and acquisitions in the Indian banking sector. It discusses several bank mergers that have occurred in India, including HDFC Bank and Times Bank, ICICI Bank and Bank of Madura, and Global Trust Bank and UTI Bank. It analyzes the motives and benefits of mergers, such as increasing competitiveness and shareholder value. The report also examines the recommendations of the Narasimham Committee on banking reforms regarding consolidation in the sector through mergers between strong banks. Overall, the document provides an overview of mergers and acquisitions that have taken place in the Indian banking industry.
MERGERS AND ACQUISITIONS PROSPECTS: INDIAN BANKS STUDYpaperpublications3
This document discusses mergers and acquisitions in the Indian banking sector from 2000-2013. It analyzes the performance of three major banks that underwent mergers - ICICI Bank, State Bank of India, and HDFC Bank. The key findings were that M&As provided some benefits like economies of scale, increased market share and branch networks, and skill/talent transfer between organizations. However, the government should not promote mergers between strong and distressed banks as it can negatively impact the stronger bank's asset quality. The document also provides details on the history and reasons for M&As in Indian banking, as well as specific examples like ICICI Bank's acquisition of Bank of Madura in 2001.
This document summarizes a case study on the corporate restructuring that occurred through the amalgamation of HDFC Bank and Centurion Bank of Punjab in India. The study aims to evaluate the share swap ratio of the merger and analyze the individual and combined benefits. It uses techniques like EPS, DCF, terminal value and WACC to calculate the share exchange ratio and net share exchange ratio. The introduction provides context on corporate restructuring and mergers & acquisitions in the Indian banking sector. The methodology section outlines a case study approach focusing on the SWOT analysis, profiles and synergies of the two banks before and after the amalgamation.
This document discusses asset management companies (AMCs) in India. It provides definitions of AMCs and describes their functions and regulatory requirements. AMCs manage portfolios of securities on behalf of investors. In India, AMCs are regulated by SEBI and must be approved to operate. AMCs can manage mutual funds, hedge funds, and other investment vehicles. They collect funds from investors and invest them in diversified portfolios according to the fund's objectives. The document compares AMCs to asset reconstruction companies and discusses how AMCs work with mutual funds and hedge funds.
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Financial Management
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1. International Journal of Research in Management ISSN 2249-5908
Issue2, Vol. 2 (March-2012)
Merger and Acquisition in Banking Industry: A Case Study of
ICICI Bank Ltd.
Dr. K.A. Goyal* and Vijay Joshi**
*Former Head of Management Department, BIT-WCAS, Muscat, Oman. Faculty, Shri
Govind Guru Government College, Banswara. Email-kagoyala@gmail.com, +91
7597293666
**Doctoral Research Scholar, Department of Business Administration, UCCMS, MLSU,
Udaipur. Email-vij.joshi18@rediffmail.com, +91 9460903956
___________________________________________________________________________
Abstract:
To keep the head high in globalized economy one has to follow the path of growth, which
contains various challenges and issues; one has to overpower these challenges and issues to
become a success story. We consider a case of ICICI Bank Ltd., the largest private sector
bank in India, which has acquired nine financial firms to make the steps of the ladder of
success. Therefore, the aim of this article is to study the growth of ICICI Bank Ltd. through
mergers, acquisitions, and amalgamation. This article is divided into four parts. The first part
includes introduction and conceptual framework of mergers and acquisition. The second part
discusses the historical background of ICICI Bank Ltd. and followed by review of literature.
The third part discusses all the mergers, acquisitions, and amalgamations in detail. Finally,
the article concludes that a firm must devise a strategy in three phases i.e. Pre-merger phase,
acquisition phase and post-merger phase. The article will be helpful for policy makers,
strategy makers, HR people, bankers, researchers, and scholars.
Key Words: Mergers, Acquisitions, Amalgamation, Banks’ Strategy, and Human
Resources.
___________________________________________________________________________
**
Corresponding Author
1.1 Introduction:
The pressures on the employees of banks around the world have been manifold across financial
system deregulation, entry of new players and products with advanced technology, globalisation of
financial markets, changing demographics of customer behaviour, consumer pressure for wider choice
and cheaper service, shareholder wealth demands, shrinking margins.
In this scenario, Mergers and acquisitions (M&As) are most widely used strategy by firms to
strengthen and maintain their position in the market place. M&As are considered as a relatively fast
and efficient way to expand into new markets and incorporate new technologies. Still, we can find
many evidences that their success is by no means assured. On the contrary, a majority of M&As fall
short of their stated aims and objectives. Some failure can be explained and justified by financial and
market factors. On the contrary a considerable number can be traced, which has neglected those
factors, which are related to human resources issues and activities.
There are numerous studies, which confirm the need for firms to systematically address a variety of
human resource issues, activities, and challenges in their merger and acquisition activities. In the
present article, a thought was provoked by a press release (May 20, 2010) that the Bank of
Rajasthan’s employees launched an agitation to protest against the then proposed merger with ICICI
Bank Ltd. It is a very serious matter as far as employees and the bank is concerned. It is quite natural
phenomena that a dissatisfied employee cannot bring efficiency and effectiveness in rendering
services.
2.1 Mergers and Acquisitions: Conceptual Framework
Consolidation of business entities is a world-wide phenomenon. One of the tools for consolidation is
mergers and acquisitions. The quest for growth is a major driving force behind mergers and
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2. International Journal of Research in Management ISSN 2249-5908
Issue2, Vol. 2 (March-2012)
acquisitions. The mergers and acquisitions in financial sector of India appear to be driven by the
objective of leveraging the synergies arising out of the consequences of M&A process. However, such
structural changes in the financial system can have some public policy implications. It is evident from
various mergers and amalgamations done by the ICICI Bank Ltd. after its inception in 1994. Still, it is
quite clear by their action that it is a path of growth for them. With this statement in mind, we would
like to present the conceptual framework for mergers and acquisitions in India’s context.
Procedures for merger, acquisition, and amalgamation of banking companies are clearly defined in
section 44(A) of the Banking Regulation Act 1949. According to the Act, a banking company will
have to place a draft before its shareholders and the draft will have to be approved by a resolution
passed by a majority in number, representing two-thirds in value of the shareholders of each of the
said companies, present either in person or by proxy at a meeting called for the purpose.
Notice of every such meeting as is referred to in sub-section (1) shall be given to every shareholder of
each of the banking companies concerned in accordance with the relevant articles of association
indicating the time, place and object of the meeting, and shall also be published atleast once a week
for three consecutive weeks in not less than two newspapers which circulate in the locality or
localities where the registered offices of the banking companies concerned are situated, one of such
newspapers being in a language commonly understood in the locality or localities.
If there is any shareholder, who has voted against the scheme of amalgamation at the meeting or has
given notice in writing at or prior to the meeting of the company concerned or to the presiding officer
of the meeting that he dissents from the scheme of amalgamation, shall be entitled, in the event of the
scheme being sanctioned by the Reserve Bank, to claim from the banking company concerned, in
respect of the shares held by him in that company, their value as determined by the Reserve Bank
when sanctioning the scheme and such determination by the Reserve Bank as to the value of the
shares (to be paid to the dissenting shareholder shall be final for all purposes). If the scheme is
sanctioned by the Reserve Bank, by an order in writing, it becomes binding not only on the banking
companies concerned, but also on all their shareholders to abide by the law.
There is provision in the Banking Regulation Act 1949, section 45, that Reserve Bank of India has
power to apply to Central Government for suspension of business by a banking company and to
prepare scheme of reconstitution for amalgamation. Reserve Bank ensures that there is good reason to
do so and may apply to the Central Government for an order of moratorium in respect of a banking
company. The Central Government, after considering the application made by the Reserve Bank
under sub-section (1), may make an order of moratorium staying the commencement or continuance
of all actions and proceedings against the company for a fixed period of time on such terms and
conditions as it thinks fit and proper and may from time to time extend the period so however that the
total period of moratorium shall not exceed six months. During the period of moratorium, if the
Reserve Bank is satisfied that it is (a) in the public interest; or (b) in the interests of the depositors; or
(c) in order to secure the proper management of the banking company; or (d) in the interests of the
banking system of the country as a whole. Apart from this, it is necessary so to do, the Reserve Bank
may prepare a scheme (i) for the reconstruction of the banking company, or (ii) for the amalgamation
of the banking company with any other banking institution (in this section referred to as "the
transferee bank").
Apart from this, there are some more guidelines for amalgamation. According to Accounting Standard
(AS) 14, ‘Accounting for Amalgamations’, issued by the Council of the Institute of Chartered
Accountants of India, amalgamations fall into two broad categories. The first category includes those
amalgamations, where there is a genuine pooling not only of the assets and of liabilities of the
amalgamating companies but also of the shareholders' interests and of the businesses of these
companies. These kinds of amalgamations are in the nature of 'merger' and the accounting treatment
of such amalgamations should ensure that the resultant figures of assets, liabilities, capital and
reserves more or less represent the sum of the relevant figures of the amalgamating companies. In the
second category, those amalgamations which are in effect a mode by which one company acquires
another company and, as a consequence, the shareholders of the company which is acquired normally
do not continue to have a proportionate share in the equity of the combined company, or the business
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3. International Journal of Research in Management ISSN 2249-5908
Issue2, Vol. 2 (March-2012)
of the company which is acquired is not intended to be continued. Such amalgamations are
amalgamations in the nature of 'purchase.
3.1 Historical Background of ICICI Bank:
The history of Industrial Credit & Investment Corporation of India (ICICI) shows that it was formed
in 1955 by the initiative of the World Bank, the Government of India and representatives of Indian
industry. The principal objective of ICICI was to create a development financial institution for
providing medium-term and long-term project financing to Indian businesses. In the 1990s, ICICI
transformed its business from a development financial institution offering only project finance to a
diversified financial services group offering a wide variety of products and services, both directly and
through a number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI became the first
Indian company and the first bank or financial institution from non-Japan Asia to be listed on the
NYSE.
Due to the changing business environment and after the adoption of liberalization, ICICI considered
various corporate restructuring alternatives in the context of the emerging competitive scenario in the
Indian banking industry, and the move towards universal banking. The managements of ICICI and
ICICI Bank formed the view that the merger of ICICI with ICICI Bank would be the optimal strategic
alternative for both the entities, and would create the optimal legal structure for the ICICI group's
universal banking strategy. Further, the merger would enhance value for ICICI shareholders through
the merged entity by low-cost deposits, greater opportunities for earning fee-based income and the
ability to participate in the payments system and provide transaction-banking services.
Consequently, ICICI Bank was promoted in 1994 by ICICI Limited, an Indian financial institution,
and was its wholly-owned subsidiary. In October 2001, the Board of Directors of ICICI and ICICI
Bank approved the merger of ICICI and two of its wholly-owned retail finance subsidiaries, ICICI
Personal Financial Services Limited and ICICI Capital Services Limited, with ICICI Bank.
Shareholders of ICICI and ICICI Bank approved the merger in January 2002, by the High Court of
Gujarat at Ahmedabad in March 2002, and by the High Court of Judicature at Mumbai and the
Reserve Bank of India in April 2002. The below mentioned table gives details of all the mergers and
amalgamations done by ICICI Bank.
Table 1
Mergers by ICICI Bank Ltd. in India
Year of
S. No. Mergers by ICICI Bank Ltd. in India
Merger
1. SCICI 1996
2. ITC Classic Finance Ltd. 1997
3 Anagram Finance 1998
4. Bank of Madura Ltd. 2001
5. ICICI Personal Financial Services Ltd 2002
6. ICICI Capital Services Ltd. 2002
7. Standard Chartered Grindlays Bank 2002
8. Sangli Bank Ltd. 2007
9. The Bank of Rajasthan Ltd. (BoR) 2010
Source: - Goyal, K. A. and Joshi, V. (2011) Mergers in Banking Industry of India: Some Emerging Issues. Asian
Journal of Business and Management Sciences, 1(2), 157-165.
Review of Literature:
There are many variables, which have been considered as significant factor in managing
Mergers and Acquisitions effectively. Communication is an unavoidable factor and effective
communication can be of utmost importance for management to deal with the individual
employee reactions to the merger, and the anxiety and stress levels following a merger.
According to Ivancevich, Schweiger and Power (1987) the aspects of communication should be
expected to focus on employees’ concern like layoffs, changes in work rules, compensation, and
pension etc.
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4. International Journal of Research in Management ISSN 2249-5908
Issue2, Vol. 2 (March-2012)
Ivancevich, Schweiger and Power (1987) studied the merger stress process, stages of the merger
process and the sources of stress created and choosing guidelines and interventions to encourage more
effective management of merger stress. They suggested some measures to effectively manage merger
stress, like prevention, to reduce the actual stress-inducing merger events; secondly, reappraisal of
employee which refers to changing initial cognitive appraisal of a situation and at last effective stress
management and professional help which supports those employees that are already stressed.
Cartwright and Cooper (1990) studied current wave of merger activity and assessed the contribution
of psychology to understand mergers and acquisitions in addressing the essence of the activity. They
found the positive relationship in combination of people and the fusion of organizational cultures.
Cartwright and Cooper (1993) reported on a recent study of a sample of 157 middle managers
involved in the merger of two U.K. Building Societies. Post-merger measures of mental health
suggested merger to be a stressful life event, even when there is a high degree of cultural
compatibility between the partnering organizations.
Appelbaum, Gandell, Yortis, Proper, and Jobin (2000) examined the multiple organizational
factors, which directly affect a merger as well as the merger process. They addressed the
issue of communication and its importance throughout the merger and acquisition (M&A)
process. Further, they analyzed the corporate culture and its effects on employees when two
companies merge, organizational change and the reaction of employees (resistance) to these
changes. Further, they studied the issue of stress, which is an outcome of M&A within
uncertain environment and reported high level of stress. Moreover, they evolved the five
major sections such as communications, corporate culture, change, stress, and
managing/strategy. These were sub-divided into three sub-sections: pre-merger; during the
merger and post-merger.
Schuler and Jackson (2001) proposed a three-stage model of mergers and acquisitions that
systematically identified several human resources issues and activities. Numerous examples were
offered to illustrate the issues and activities in each of the three stages. The article concluded with a
description of the role and importance of the HR department and leader has its presence in business
environment, in order to get competitive advantage the acquirer must consider the HR perspective to
bring effectiveness in a deal of a merger.
Researchers in some articles also raise issues related to human resource management. Bryson,
(2003) reviewed the literature around managing HRM risk in a merger. He found that poor
merger results are often attributed to HRM and organizational problems, and that several
factors related to maintaining workforce stability are identified as important in managing
HRM risk. Schraeder and Self (2003) found that organizational culture is one factor as a
potential catalyst to M&A success.
Paul (2003) studied the merger of Bank of Madura with ICICI Bank. The researcher evaluated the
valuation of the swap ratio, the announcement of the swap ratio, share price fluctuations of the banks
before the merger decision announcement and the impact of the merger decision on the share prices.
He also attempted the suitability of the merger between the 57 year old Bank of Madura with its
traditional focus on mass banking strategies based on social objectives, and ICICI Bank, a six year old
‘new age’ organisation, which had been emphasising parameters like profitability in the interests of
shareholders. It was concluded that synergies generated by the merger would include increased
financial capability, branch network, customer base, rural reach, and better technology. However,
managing human resources and rural branches may be a challenge given the differing work cultures in
the two organisations.
Salama, Holland and Vinten (2003) opined and explored the challenges and opportunities in
integration process, studied the factors responsible for the success of cross-border acquisitions within
related industries. They emphasised the corporate strategies the three partnered companies used to
maximise synergies, and to minimise the negative effects of the unavoidable, but necessary and
complex, acculturation process. They found in the case study that successful co-operation between the
firms resulted from the learning process developed by the partners. Knowledge acquisition and the
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5. International Journal of Research in Management ISSN 2249-5908
Issue2, Vol. 2 (March-2012)
subsequent organisational learning were the important desirable outcomes of the acquisition processes
experienced by the organisations.
Zollo & Singh (2004) studied the knowledge-based view of corporate acquisitions and tested the post-
acquisition consequences on performance of integration decisions and capability-building
mechanisms. They used a sample of 228 acquisitions in the U.S. banking industry and found that
knowledge codification strongly and positively influences acquisition performance, while experience
accumulation does not. Furthermore, increasing levels of post-acquisition integration strengthen the
positive effect of codification. Finally, the level of integration between the two merged firms
significantly enhances performance, while replacing top managers in the acquired firm negatively
impacts performance, all else being equal. Implications were drawn for both organizational learning
theory and a knowledge-based approach to corporate strategy research.
George & Hegde (2004) reported a case for the delicate aspect of employees' attitudes, their
satisfaction and motivation, which are posited as prerequisites for customer satisfaction, which is,
again necessary for the competitive sustenance of the organization.
Cartwright and Schoenberg (2006) assessed three primary streams of enquiry within the strategic and
behavioural literature. They studied the issues of strategic fit, organizational fit, and the acquisition
process itself. They briefly reviewed the recent achievements within each of these research streams.
However, in parallel to these research advances, the failure rates of mergers and acquisitions have
remained consistently high. Possible reasons for this dichotomy were discussed, which in turn
highlight the significant opportunities that remain for future M&A research.
Saraswathi (2007, p. 230) studied the merger of Global Trust Bank and Oriental Bank of Commerce.
It was found by the author that this merger paved the way to several things in the transition period and
pre merger strategy. It visualized the need for the diverse cultures to arrive at an understanding and to
work hand in hand. Apart from the integration of diverse cultures, a way to inherit the advanced
processes and expertise of the staff in a phased and systematic manner should be paved. It is also
equally important and challenging for the transferee bank in handling the issues relating to
continuance of the services of employees of the transferor bank and their career planning.
Murthy (2007) studied the case of five bank mergers in India viz. Punjab National Bank and New
Bank of India, ICICI Bank and Bank of Madura, ICICI Ltd. and ICICI Bank, Global Trust Bank and
Oriental Bank of Commerce and Centurion Bank with Bank of Punjab. It was concluded by the author
that consolidation is necessary due to stronger financial and operational structure, higher resources,
wider branch network, huge customer base, technological advantage, focus on priority sector, and
penetration in rural market. Further, some issues as challenges in aforesaid mergers were identified as
managing human resources, managing the client base, acculturation, and stress of bank employees.
Ellis, Reus and Lamont (2009) explored the independent and interactive effects of procedural justice
and informational justice on post-deal value creation in large, related acquisitions. Their results
showed that informational justice and procedural justice affect different components of value creation.
Procedural justice is critical in realizing market position improvements following the integration
process, while informational justice is essential in achieving market position gains during integration
and financial return gains both during and post-integration. Indicating that the interrelationships
between different justice dimensions may be more complex than previously thought, they found that
procedural justice reduces the positive effects of informational justice on financial return during the
integration process, while it magnifies the effects of informational justice on the combined firms'
market position during integration efforts. Authors explored the implications of these results for future
research on the acquisition integration process and for practicing managers engaging in large, related
acquisitions.
Cascio (2010) discussed the lessons from HR professionals from the merger of health insurer Bupa
Australia with the Medical Benefits Fund Group, the second largest health insurer in Australia. It was
opined that Bupa Australia is the only Australian health insurer to have kept premium increases below
the industry average for many years. It adds that being a privately managed company, Bupa Australia
reinvests any financial surpluses for the benefit of its customers. Here, Merger Lessons for banking
industry is that transferor’s bank employees must be given some stimuli to boost their morale and they
should be prevented from various stressors.
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Maire and Collerette (2011) studied the case of an international post-merger integration project in the
private banking sector. It raised the challenges that were met, describes the methodology and the tools
used to manage the process, and highlights the factors that led to success. This experience suggests
that successful integration management mainly rests upon capabilities in communication,
organization, and change management. It also highlighted the importance of having an Integration
Manager in charge of the process in order to favour integration success. In particular, it appears that
pace is the heartbeat of integration progress and that one of the Integration Manager's main roles is to
set the pace of integration by applying pressure to speed up progress, while also providing a climate
where people can be motivated to work together towards organizational objectives and success.
Weber and Fried (2011) discussed the role of human resources (HR) practices in managing the
cultural integration process in a post-merger and acquisition (M&A) culture. The authors argued that
the pervasiveness and growth of M&A's stand in sharp contrast to their high failure rate. Topics
include the neglected role of HR practices in the management of M&As and the contribution of HR
practices to the success of M&As.
Chen and Lin (2011) examined the possible benefits and effects of post-M&A integration on new
product development (NPD) performance in terms of efficiency and effectiveness. They took the
sample size of 251 respondents. Research tools for statistical analysis were used as Confirmatory
factor analysis (CFA) and structural equation modelling (SEM). They found that external integration
correlates positively with internal integration. Although external integration relates positively to new
product competitive advantage (NPCA), internal integration does not have a positive correlation with
NPCA. Further, product vision positively correlates with NPCA and NPD performance, and NPCA
positively correlates with NPD performance. In addition, they examined the mediation effect in terms
of Sobel t-test, which revealed that the NPCA is a significant mediator for the influence of
interdepartmental integration on NPD performance. Moreover, this study provides a framework for
managing post-M&A integration and closes with a discussion of the theoretical and practical
implications of the research findings.
Mergers and Acquisitions by ICICI Bank Ltd.
1. Amalgamation of SCICI.
Effective April 1, 1996, ICICI acquired SCICI Limited, a diversified financial institution in which
ICICI had an existing 19.9% equity interest. ICICI acquired SCICI principally to benefit from the
scale efficiencies of being a larger entity. The assets of SCICI amounted to Rs. 50.4 billion (US$ 1.0
billion), approximately 16.8% of ICICI’s total assets at year-end fiscal 1996. The business
combination was accounted for by the purchase method. The business combination resulted in
negative goodwill of Rs. 3.1 billion (US$ 65 million) as the purchase price was less than the fair value
of the net assets acquired. Of this amount, Rs. 600 million (US$ 13 million) was set-off against
certain property and equipment and an amount of Rs. 253 million (US$ 5 million) was accrued to
income in each of the years for fiscal 1997 to fiscal 2001. In addition, in fiscal 1998, income of Rs.
242 million (US$ 5 million) was accrued from the sale of SCICI's headquarters building in Mumbai.
2. Amalgamation of ITC Classic Finance Ltd.
It was one of the first-of-its-kind mergers in the country's financial sector, ITC Classic Finance Ltd,
the beleaguered non-banking financial arm of ITC Ltd, and country's premier development financial
institution, Industrial Credit Investment Corporation of India (ICICI) to merge their operations and
share swap ratio for ITC Classic-ICICI merger was 15:1.
Tobacco major, ITC was desperately scouting a buyer for ITC Classic, which had accumulated losses
of over Rs. 300 crore.
ITC Classic Finance Ltd was named after ITC’s premium cigarette brand ‘Classic.’ It was
incorporated in 1986. ITC Classic was a non-banking finance company (NBFC). Largely, it was
engaged in hire, purchase, and leasing operations. In addition, the company undertook investment
operations on a substantial scale. The company did very well in the initial years and developed a
strong network to mobilize retail deposits. Its fund-based activities such as corporate leasing, bill
discounting, and equities trading also grew substantially over the years. At a compounded annual
growth rate of 78% during 1991-96, ITC Classic’s annual turnover increased from Rs. 17.3 crore to
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over Rs. 310 crore and net profits from Rs. 2.3 crore to Rs. 31 crore in the same period. By the June
1996, the company had a deposit portfolio of Rs. 800 crore consisting mainly of retail deposits. The
capital market boom of the early 1990s was responsible largely for ITC Classic’s impressive
financials growth. Around 50% of ITC Classic’s assets had to be kept in financing and a further 25%
was to be held in liquid funds or cash to handle cash outflows. However, Classic was free to invest the
remaining 25%, which happened to be in the ‘boom stocks.’ When the markets crashed in 1992, ITC
Classic had to face heavy losses.
As far as ICICI was concerned, it was totally a ‘win’ proposition. The biggest benefit and opportunity
for ICICI was ITC Classic’s retail network, which comprised 8 offices, 26 outlets, 700 brokers, and a
depositor-base of 7 lakhs investors. ICICI planned to use this to strengthen the operations of ICICI
Credit (I- Credit), a consumer finance subsidiary that ICICI had floated in April 1997. It was rightly
stated by the then ICICI managing director and CEO, K. V. Kamath said that the merger would give
them a fantastic retail base as ITC Classic had an investor base of over seven lakhs. Besides, there
would be a synergy in business profile as on the asset side the ITC outfit is into leasing, hire,
purchase, and bill discounting as they had a common corporate clientele.
3. Amalgamation of Anagram Finance
Anagram was primarily engaged in retail financing of cars and trucks. Between 1992 and 1998,
Anagram has built a strong retail franchise, a distribution network of more than 50 branches, which
were located in the prosperous states of Gujarat, Rajasthan, and Maharashtra, and it has a depositor
base of 250,000 customers.
Anagram Finance was adversely affected by the problems faced by the banking sector because of
diverse factors including accounting and financial issues such as non-performing assets and high cost
of funding etc. Anagram Finance conducted a detailed examination and review of the operations and
financial condition of the company. It included a conservative estimation of provisions required for no
performing or potential nonperforming assets had resulted in the net worth of the company becoming
negative, necessitating infusion of further funds into the company.
In order to protect the interests of the creditors including depositors and public shareholders, the
investment companies had decided to infuse long term resources of Rs 125 crores convertible into
nominal equity capital of the company upon the merger becoming effective in pursuance of the
Articles of Agreement signed with ICICI on May 20, 1998. Share swap set for ICICI, Anagram
Finance merger 1:15. Listing the reasons for the merger, ICICI said it has over the years consolidated
its premier position as a wholesale provider of finance.
4. Amalgamation of Bank of Madura
For over 57 years, Bank of Madura (MoM) operated as a profitable entity in Indian Banking Industry.
It had a significant coverage in the southern states of India. It had extensive network of 263 branches
across India. According to Murthy (2007), the bank had total assets of Rs. 39.88 billion and deposits
of Rs. 33.95 billion as on September 30, 2000. It had a capital adequacy ratio of 15.8% as on March
31, 2000. With a view to expanding its assets, client base and geographical coverage, ICICI Bank was
scouting for private banks for merger. In addition to that, its technological up gradation was inching
upwards at snail’s pace. In contrast, BoM had an attractive business per employee figure of Rs. 202
lakh, a better technological edge, and a vast base in southern India as compared to Federal Bank.
While all these factors sound good, a tough and challenging task in terms of cultural integration and
human resources issues lay ahead for ICICI Bank.
With these considerations, ICICI Bank announced amalgamation with the 57 year BoM, with 263
branches, out of which 82 were operating in rural areas; the majority of them were located in southern
India. As on December 9, 2000, on the day of announcement of the merger, the Kotak Mahindra
group was holding about 12% stake on BoM, the Chairman of BoM, Mr. K. M. Thaigarajan, along
with his associated, was holding about 26% stake, Spic group had about 4.7%, while LIC and UTI
were having marginal holdings. This merger was supposed to increase ICICI bank’s hold on the South
Indian market. The swap ratio was approved to be at 1:2.
5. Merger of ICICI Personal Financial Services Ltd. and ICICI Capital
Services Ltd.
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Following the approval of shareholders, the High Court of Gujarat at Ahmedabad and the High Court
of Judicature at Bombay, the Reserve Bank of India approved the amalgamation of ICICI, ICICI
Personal Financial Services, and ICICI Capital Services with and into ICICI Bank on April 26, 2002.
6. Takeover of Standard Chartered Grindlays Bank’s Two Branches
ICICI Bank acquires Shimla and Darjeeling Branches from Standard Chartered Grindlays Bank Ltd.
in these two most sought after tourist destinations in the Himalayas. In a telephonic conversation,
ICICI Bank ED Chanda Kochhar told to Economic Times from Mumbai that the bank has been
planning to grow its network countrywide, and "this acquisition is one step in that direction and a
continuation of our strategy to expand our brand of technology banking". ICICI Bank senior vice-
president and regional head, Chandigarh, Anand Kumar revealed that the Shimla branch had more
than 3,000 retail accounts and a deposit base of Rs 41 crore.
7. Amalgamation of Sangli Bank
Sangli Bank Ltd. was an unlisted private sector bank headquartered at Sangli in the state of
Maharashtra, India. As on March 31, 2006, Sangli Bank had deposits of Rs. 20.04 billion, advances of
Rs. 8.88 billion, net NPA ratio of 2.3% and capital adequacy of 1.6%. In the year ended March 31,
2006, it incurred a loss of Rs. 29 crore. Sangli Bank had 198 branches and extension counters,
including 158 branches in Maharashtra and 31 branches in Karnataka. Approximately 50% of the total
branches were located in rural and semi-urban areas and 50% in metropolitan and urban centres. The
bank had approximately 1,850 employees. The Board of Directors of ICICI Bank Ltd. and the Board
of Directors of The Sangli Bank Ltd. at their respective meetings approved an all-stock amalgamation
of Sangli Bank with ICICI Bank on December 09, 2006. The amalgamation was subject to the
approval of the shareholders of ICICI Bank and Sangli Bank, Reserve Bank of India and such other
approvals required. The deal was in the ratio of one share of ICICI Bank for 9.25 shares of the
privately-owned, non-listed Sangli Bank. The Bhate family of Sangli almost hold 30% of Sangli
Bank.
The proposed amalgamation was expected to be beneficial to the shareholders of both entities. ICICI
Bank would seek to leverage Sangli Bank’s network of over 190 branches and existing customer and
employee base across urban and rural centres in the rollout of its rural and small enterprise banking
operations, which were key focus areas for the Bank. The amalgamation would also supplement ICICI
Bank’s urban distribution network. The amalgamation would enable shareholders of Sangli Bank to
participate in the growth of ICICI Bank’s strong domestic and international franchise. The
amalgamation also provided new opportunities to Sangli Bank’s employees, and gives its customers
access to ICICI Bank’s multi-channel network and wide range of products and services.
The provisions of Section 44(A) of the Banking Regulation Act, 1949, governed the proposed
amalgamation. The proposed amalgamation had the approval of the respective Boards of ICICI Bank
and Sangli Bank and to become effective, required the consent of a majority in number representing
two-thirds in value of the shareholders of ICICI Bank and Sangli Bank, present in person or by proxy,
at their respective meetings called for this purpose, the sanction of Reserve Bank of India by an order
in writing and sanction or approval, if required, under any law or regulation, of the Government of
India, or any other authority, agency, department or persons concerned
8. Amalgamation of the Bank of Rajasthan Ltd.
The The Bank of Rajasthan Ltd. was incorporated on May 7, 1943 as a Company defined under the
Companies Act, 1956 and has its Registered Office at Raj Bank Bhawan, Clock Tower, Udaipur,
Rajasthan. The Bank of Rajasthan had a network of 463 branches and 111 automated teller machines
(ATMs) as of March 31, 2009. The primary object of the Transferor Bank was banking business as set
out in its Memorandum of Association. For over 67 years, the Bank of Rajasthan had served the
nation’s 24 states with 463 branches as a profitable and well-capitalized Bank. It had a strong
presence in Rajasthan with branch network of 294 that is 63 percent of the total branches of BoR with
men power strength of more than 4300. The balance sheet of the Bank shows that it had total assets of
Rs. 173 billion, deposits of Rs. 150.62 billion, and advances of Rs. 83.29 billion as on March 2010.
The profit and loss account of the bank shows the net profit as Rs. -1.02 billion as on March 2010,
which shows that bank, was not in good financial condition.
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On the other hand, The ICICI Bank Ltd. was incorporated on January 5, 1994 under the Companies
Act, 1956 and has its Registered Office at Landmark, Race Course Circle, Vadodara, Gujarat. The
Transferee Bank, as of May 21, 2010, has a network of 2,000 branches and extension counters and has
over 5,300 automated teller machines (ATMs). At present the bank has 79,978 employees with strong
financial like total assets of Rs. 3634 billion, total deposits of Rs. 2020.16 billion, advances of Rs.
1812.06 billion and net profit of Rs. 42.25 billion as on March 2010.
The amalgamation of the Transferor Bank with the Transferee Bank was in accordance with the
provisions of the Scheme formulated pursuant to Section 44A of the Banking Regulation Act, 1949,
Reserve Bank of India’s guidelines for merger/amalgamation of private sector banks dated May 11,
2005, and in accordance with the applicable provisions of the Companies Act, 1956, and the
Memorandum and Articles of Association of the Transferor Bank and the Transferee Bank and other
applicable provisions of laws.
The objectives and benefits of this merger are clearly mentioned in the scheme of this merger by
ICICI Bank its customer centric strategy that places branches as the focal points of relationship
management, sales, and service in geographical micro markets. As it is evident that the BoR had deep
penetration with huge brand value in the State of Rajasthan where it had 294 branches with a market
share of 9.3% in total deposits of scheduled commercial banks.
It was presumed that the merger of BoR in ICICI Bank will place the Transferee Bank among the top
three banks in Rajasthan in terms of total deposits and significantly augment the Transferee Bank’s
presence and customer base in Rajasthan and it would significantly add 463 branches in branch
network of ICICI Bank along with increase in retail deposit base. Consequently, ICICI Bank would
get sustainable competitive advantage over its competitors in Indian Banking.
When the information about this merger was communicated to the employees, they did not accept this
merger. All the employees were against this merger. All the three major employee unions i.e. All
India Bank of Rajasthan Employees Federation, All India Bank of Rajasthan Officers' Association and
Akhil Bhartiya Bank of Rajasthan Karmchari Sangh, called the strike demanding the immediate
termination of the ICICI-BoR merger proposal. It is a very strong phenomenon of the behaviour of
employees in the growth strategy like mergers and acquisitions. The issue of employees’ perception
towards mergers needs special attention from researchers and thinkers in order to convert mergers as
synergy. At this juncture, the biggest challenge for ICICI Bank Ltd. was to encounter the agitation
from the 4300 BoR employees. Now, since the merger has taken place the critical issue for discussion
is the management of Human Resources in the course of Mergers and Amalgamation.
A merger can be distinguished in the following phases:
PRE MERGER PHASE ACQUISITION PHASE POST MERGER PHASE
Financial position of Cost of merger & acquisition Corporate culture
transferor company Maintenance of customer Existing value systems
Market Value relationships during integration Staff qualification
Brand Value phase Stress Management
Communication Issues Knowledge transfer among Salary
Share Holders & other units that are to be integrated Technology
stake holders’ view Overcoming of staff’s HR Policy
Assets & Liabilities suspiciousness of the other Leadership styles
organization (‘Us vs. Them’ Core competencies
syndrome) Post Integration
Allocation of responsibility
Language barriers and country
specific cultural differences.
The above discussion convey a growth study of ICICI Bank Ltd. through mergers and acquisitions but
at the same time the bank has to focus on manpower to get sustainable development.
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Conclusion:
Thus, as per the above discussion we can say that Mergers and acquisitions (M&As) are considered as
corporate events which helps an organization to create synergy and provide sustainable competitive
advantage, but, simultaneous these sorts of corporate events have the potential to create severe
personal trauma and stress which can result in psychological, behavioural, health, performance, and
survival problems for both the individuals and companies, whether it is a bank or a non banking
financial corporation, involved in it. It is evident from the case of ICICI Bank Ltd. that how an
organization can become market leader by adopting some strategic tools like mergers and
acquisitions.
The post-merger integration process is a difficult and complex task. It comes along with long lists of
activities and tasks that have to be fulfilled within a short time and partly with incomplete information
(e.g. formation of new teams and departments). There are many opportunities to exploit and many
decisions to take. However, we can divide various challenges and issues in three phases i.e. pre-
merger phase, acquisition phase and post-merger phase, which has scope for further research.
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http://www.icicibank.com/aboutus/history.html
http://www.moneycontrol.com/financials/bankrajasthan/capital-structure/BR
http://www.business-standard.com/india/news/icici-bank-sangli-bank-merger/267465/
http://www.expressindia.com/news/ie/daily/19971127/33150123.html
http://www.expressindia.com/fe/daily/19971202/33655033.html
http://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=16437
www.myprojectpaper.com/user/image/theitcclassicstory.doc
http://www.business-standard.com/india/news/anagram-finance-to-mergeicici/23989/
http://www.business-standard.com/india/news/115-swap-set-for-icici-anagram-finance-merger/23037/
http://www.indianexpress.com/Storyold/33395/
www.icicibank.com/aboutus/zip/PartIV.pdf
http://articles.economictimes.indiatimes.com/2002-07-02/news/27364631_1_icici-bank-largest-
private-sector-bank-branch
http://www.rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=22977
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